Israel cast a wary eye toward Italy on Tuesday as a political deadlock emerged
from its stunning election, where a comedian’s protest party led the poll and no
group secured a clear majority. The Italian stock market fell and state
borrowing costs rose as the election results threw the country into shock and
instability.

“The winner is: Ingovernability” ran the headline in Rome
newspaper Il Messaggero, reflecting the stalemate the country would have to
confront in the next few weeks as sworn enemies would be forced to work together
to form a government.

In a sign of where that might lead, former prime
minister Silvio Berlusconi indicated his Center-Right might be open to a grand
coalition with the Center-Left bloc of Pier Luigi Bersani, which will have a
majority in the lower house thanks to a premium of seats given to the largest
bloc in the chamber.

Results in the upper house, the Senate, where seats
are awarded on a region-by-region basis, indicated the Center-Left would end up
with about 119 seats, compared with 117 for the Center-Right. But 158 are needed
for a majority to govern.

Any coalition administration that may be formed
must have a working majority in both houses in order to pass
legislation.

Comedian Beppe Grillo’s anti-establishment 5-Star Movement
won the most votes of any single party, taking 25 percent. He shows no immediate
inclination to cooperate with other groups.

Despite talk of a new
election, the main established parties seem likely to try to avoid that, fearing
even more humiliation.

Israeli officials, meanwhile, said that Italian
political and economic uncertainty does not serve Israel’s better
interests.

An Italy that is weak because of political and economic
problems is not an Italy that could stand up for Israel – and by so doing buck
the wishes of the more powerful EU countries – inside EU institutions, as Rome
has done on certain occasions over the past decade.

While Berlusconi is
considered a strong ally of Israel’s, his friendship is seen by some as a
liability because he has alienated so many in Europe.

“He is completely
discredited in Europe,” one official said. He added that it does not necessarily
help if Berlusconi goes to bat for a country, because then other countries will
ask themselves if they want to make common cause with the controversial Italian
politician. “His support can be a boomerang,” he said.

In addition, amid
Italy’s political and economic chaos, there may be calls for pulling Italian
troops out of UNIFIL in Lebanon, something Jerusalem does not want to see
happen, the official said.

Bersani is viewed as friendly, though some
officials in Jerusalem are concerned about his history in the Italian communist
party, as well as the possibility that he may pick Massimo d’Alema, a man who
has served as Italy’s prime minister and foreign minister in the past, and is
viewed by some in Israel as having a pro-Palestinian tilt.

The officials
are most concerned, however, about the impact of Grillo and his party. Grillo,
one official said, is against everything: the Left, the Center, the Right,
politicians, the EU, America and – of course – Israel. The good news, he said,
is that he seems to want to concentrate more on domestic issues than foreign
affairs.

World financial markets, meanwhile, reacted nervously to the
prospect of a stalemate in the euro zone’s third-largest economy, with memories
still fresh of the crisis that took the 17-member currency bloc to the brink of
collapse in 2011.

In a clear sign of worry at the top over what effect
the elections could have on the economy, Prime Minister Mario Monti, whose
austerity policies were repudiated by voters, called a meeting with the governor
of the central bank, the economy minister and the European affairs minister for
later on Tuesday.

Other governments in the euro zone sounded uneasy.
Allies of German Chancellor Angela Merkel made no secret of disappointment at
Monti’s debacle and urged Rome to continue with economic reforms Berlin sees as
vital to stabilizing the common currency.

France’s Socialist finance
minister also expressed “worry” at the prospect of legislative deadlock in
Italy, but said that Italians had rejected austerity and hoped Bersani’s
Center-Left could form a stable government to help foster growth in
Europe.

Berlusconi, a media magnate whose campaigning all but wiped out
Bersani’s once commanding opinion poll lead, hinted in a telephone call to a
morning television show that he would be open to a deal with the Center-Left –
but not with Monti, the technocrat summoned to replace him in a crisis 15 months
ago.

“Italy must be governed,” Berlusconi said, adding that he “must
reflect” on a possible deal with the Center-Left. “Everyone must be prepared to
make sacrifices,” he said of the groups which now have a share of the
legislature.

The poor showing by Monti’s centrist bloc reflected a
weariness with austerity that was exploited by both Berlusconi and Grillo; only
with the help of Center-Left allies did Bersani beat 5-Star, by just 125,000
votes, to control the lower house.

The worries immediately went beyond
Italy’s borders.

“What is crucial now is that a stable functioning
government can be built as swiftly as possible,” said German Foreign Minister
Guido Westerwelle. “This is not only in the interests of Italy but in the
interests of all Europe.”

The euro skidded to an almost seven-week low
against the dollar in Asia on fears about the euro zone’s debt crisis. It fell
as far as $1.3042, its lowest since January 10.

Commentators said all of
Grillo’s adversaries underestimated the appeal of a grassroots movement that
called itself a “nonparty,” particularly its allure among young Italians who
find themselves without permanent full-time jobs and the prospect of a decent
future.

The 5-star Movement’s score of 25.5% in the lower house was just
ahead of the 25.4% for Bersani’s Democratic Party, which ran in a coalition with
the leftist SEL party, and it won almost 8.7 million votes overall – more than
any other single party.

“The ‘non-party’ has become the largest party in
the country,” said Massimo Giannini, commentator for Rome newspaper La
Repubblica, of Grillo, who mixes fierce attacks on corruption with policies
ranging from clean energy to free Internet.

Grillo’s surge in the final
weeks of the campaign threw the race open, with hundreds of thousands turning up
at his rallies to hear him lay into targets ranging from corrupt politicians and
bankers to Merkel.

In just three years, his 5-Star Movement, heavily
backed by a frustrated generation of young Italians, has grown from a marginal
group to one of the most talked about political forces in Europe.

A long
recession and growing disillusionment with mainstream parties fed a bitter
public mood that saw more than half of Italian voters back parties that rejected
the austerity policies pursued by Monti with the backing of Italy’s European
partners.

Berlusconi’s campaign, mixing sweeping tax cut pledges with
relentless attacks on Monti and Merkel, echoed many of the themes pushed by
Grillo and underlined the increasingly angry mood of the Italian electorate.

Sites Of Interest

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